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ETL vs ELT: What to Choose For Your Business?

As your company is scaling up, business analytics becomes increasingly important. And one of the biggest challenges is managing the vast amounts of data that a large business tends to create — sales records with dozens of data points, customer information, etc.

The first thing that comes to mind is the classic ETL protocol that first transforms raw data and then stores it for easier analytics. However, the new way of storing data, ELT, provides more opportunities for BI. This scheme stores vast amounts of raw data that can later be used for data mining or machine learning with potentially better results.

What should you choose for your organization? Follow this guide to find out all the pros and cons of the two and see examples of both systems in use.

Key differences between ETL vs ELT

ETLELT
Data is first transformed and then loaded into the data storage solutionWorking orderData is loaded into the data storage solution and then transformed
Highly developed technologyEase of adoptionNew technology, may require more investment to adopt
Requires a staging area outside of the warehouseData transformationHappens within the warehouse or a lake
Can be used to transform unstructured data and load it into structured formSupport of unstructured dataCan be used to store unstructured data
SlowData loading speedFast
Initially takes longer, but later on, analysis becomes fasterData transformation speedCan be faster since you can run smaller queries on the raw data
Best for on-premise data warehouses.Data storageBest for data lakes, lakehouses, or marts. Works well with cloud-based storage as well.
LowStorage sizeHigh
Structured dataSource dataStructured, unstructured, or semi-structured data
Best suited for small amounts of dataAmounts of dataWorks well with large data pools
Only transformations selected by the user are availableAvailability of dataAll raw data is available
HighLatencyLow
LowFlexibilityHigh
LowScalabilityHigh
Legacy on-site solutions require expensive maintenanceMaintenanceCloud-based solutions do not require maintenance
Can be extremely costly upfront if you’re using an on-site solution. Cloud-based solutions are much cheaper.CostThe initial cost for loading data is low, but most cloud-based solutions charge per query. Running large queries may be very expensive.

How ETL works?

ETL stands for “Extract, Transform, Load.” When you’re using ETL tools for data manipulation, you first need to transform the data pulled from various sources (webhooks, databases, or files), and then load it into your database, whether it’s on-site or cloud-based.

Naturally, you need a staging area for data transformation before it can be loaded into the storage. This can often become a huge bottleneck, especially if you’re working with large amounts of data. On the plus side, the structured data that is going to end up in your storage will be instantly ready for analytics.

How ELT works?

As the name suggests, ELT turns this concept around. Instead of transforming the data prior to loading, it first loads the extracted data, and only then transforms it. It eliminates the need for the staging area and the bottleneck that it can create in your system.

The downside is that you’ll need to store loads of raw unstructured data and transform it before it can be analyzed. This can be great if you need historical reporting or want to experiment with data mining, but the price per query can prove to be too high for smaller companies.

ETL vs ELT pros and cons

Even though ELT is the newer development in data science, it doesn’t mean it’s better by default. Both systems have their advantages and disadvantages. So let’s take a look before going deeper into how they can be implemented.

ETL pros

Fast analytics

While transforming data prior to loading it into your storage solution can be a rather slow process, it does come with its advantages. Since the data is already pre-structured when it’s loaded, analyzing it is fast and straightforward.

Safety compliance

Another benefit is compliance with safety protocols, especially GDPR. When using ELT, you inevitably load raw data that can reveal your customers. This can include email addresses or IP addresses that must be masked as per the EU guidelines. If your storage is based outside of the EU, you’ll be breaking the law by uploading this type of data without transformation.

With ETL, this problem is non-existent as you transform the data prior to loading and do not include sensitive pieces of data.

Low storage requirements

When it comes to data storage, ETL also has a great benefit. As you’re not storing large amounts of raw data, you don’t need as much storage capacity. This is cost-effective if the storage solution you use charges for storage.

Wide adoption

The last of the major benefits of ETL is the fact that it’s been out there for over twenty years. As a result, there’s a lot of infrastructure and tools surrounding it. So, you will have little to no problems implementing it in your organization.

ETL cons

Initial cost

One of the most obvious advantages of ETL is the high initial cost. The cost will be measured in hundreds of thousands of dollars if you plan to have on-site data storage. Even if your storage is cloud-based, the initial cost is going to be rather high because you need to start with creating a transformation algorithm. With ELT, you can start uploading data and then run small transformations before settling on an advanced custom solution.

Lack of flexibility

ETL isn’t as flexible as ELT. Since you need to have a large transformation algorithm that needs to export data and transform it prior to loading, it would take a lot of work to change it. If you’re changing data sources or need to add a new one, this could mean rewriting parts of the large algorithm, and dealing with legacy is never easy.

Slow processing

A minor but an important drawback is that working with large amounts of data becomes increasingly difficult with ETL. The transformation stage may become a bottleneck in the system and cause it to process the data slower.

ELT pros

Fast loading

One of the main advantages of ELT, as opposed to ETL, is a much faster processing speed when dealing with Big Data. A BigQuery or Amazon Redshift pipeline will load all your raw data much faster than any ETL solution would.

Lots of analytics options

Since you’re storing large amounts of raw data, ELT is ideal for broad scope analytics. You can both run very limited transformations to get reports about specific things, or a large analysis of historical data. ETL doesn’t allow this as it doesn’t store raw data.

Low maintenance requirements

Maintenance will be out of the picture with most ELT systems as you won’t have to use on-site storage, and companies that offer ELT services do all the maintenance themselves.

ELT cons

Hard to implement

The price for that ease of maintenance is that setting up an ELT pipeline can be hard and expensive. In addition, it’s a relatively new technology and finding an employee or a contractor who possesses a high level of expertise can be a challenge.

Price per query

Running such a system can also incur a high cost on your business. Most ELT tools charge business owners for each query depending on the amount of data being transformed. With larger queries, it can be rather expensive and smaller businesses may not have the resources to be running analytics constantly.

ETL vs ELT example

Now, let’s look at some practical examples of how these pros and cons can play out in real life.

ETL example

A classic example of an ETL pipeline is a daily reporting solution. A small to medium eCommerce company using a single tool or a small arsenal of tools that are not bound to change in the near future does not need a complex and expensive solution like ELT. It also does not have the resources to handle the storage overhead that inevitably comes with ELT.

The first step towards a simple ETL pipeline for reporting would be finding an importing and transformation tool. Coupler.io is a great choice for that. This tool can natively integrate with plenty of standard eCommerce tools and can draw raw data from most platforms via API or CSV and JSON files. Data imports can be fine-tuned by picking just the data points you need to import for your reporting needs. You can also automate data imports to run daily or monthly with set time intervals.

With the data you’ve selected being uploaded automatically, you won’t have any trouble accessing it for quick analytics. Try Coupler.io for your project.

The obvious drawback is that this company would have limited access to historical data, but this can be sacrificed to reduce overhead and still have a decent reporting solution.

ELT example

A good example of an ELT pipeline would be a large company, or one that is scaling up fast and has multiple, often changing data sources. The main goal of this company is not to run simple reports but to obtain useful insights from huge pools of data. So naturally, this company has the resources to afford the cost of running multiple large queries.

It would be a massive inconvenience to create and then constantly improve the transformation stage of an ETL pipeline, so this company will benefit from an ELT solution a lot more.

Loading data is the easiest part of the system, though. To make the most of ELT, this large company would have to develop multiple transformations and execute them. This comes at a high price at most ELT tools, but since companies that use this solution know that having an edge on competition makes or breaks their company, it’s worth it.

When to use ETL or ELT?

Every company and organization is different. If you want to decide whether you want to use ETL or ELT at yours, refer to these points.

ETL use cases

  • Your company has its own storage
  • Data storage cost is crucial
  • You’re working with small to medium amounts of data
  • Your data is consistent
  • You need standard analytics

ELT use cases

  • You deal with a lot of data
  • Data needs fast storage
  • You need historical data analysis
  • Data sources change often
  • You run different types of analytics
  • Have the resources to process

Making the final choice

The final choice between what to use, ETL or ELT, is always on your shoulders. Only the owner of a business knows what their business model needs. Feel free to use this article as a useful resource and use the checklist above to decide whether you want to go for a cheaper, standardized solution or a more expensive one that allows for more flexibility.

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